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Order fulfillment policies for ship-from-store implementation in omni-channel retailing

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  • Bayram, Armagan
  • Cesaret, Bahriye

Abstract

One of the recent trends in omni-channel retailing is ship-from-store which allows a retailer to fulfill online orders by using inventory from a nearby store. The benefits of this fulfillment model include faster delivery, lower shipment costs, higher in-stock probability, increased sales and customer satisfaction, etc. Despite its many benefits, this fulfillment model introduces many new operational challenges to the retailer, including the need to identify from which location to fulfill an online order when it arrives. In this study, we consider a retailer having both online and store operations, with each channel carrying its own inventory. Store orders are fulfilled from store inventories, whereas an online order can be shipped either from an online fulfillment center or from any other store that maximizes the retailer’s overall profit. Our study investigates dynamic fulfillment decisions: from which location to fulfill an online order when it arrives. We incorporate the uncertainty both in demand and in the cost of shipment to individual customers to characterize the optimal cross-channel fulfillment policy. Due to the optimal policy being computationally intractable for large-sized problems, we construct an intuitive heuristic policy to guide the retailers in their fulfillment decisions. We find that the proposed heuristic method is effective and obtains solutions within a reasonable amount of time for the cross-channel fulfillment problem.

Suggested Citation

  • Bayram, Armagan & Cesaret, Bahriye, 2021. "Order fulfillment policies for ship-from-store implementation in omni-channel retailing," European Journal of Operational Research, Elsevier, vol. 294(3), pages 987-1002.
    • Handle: RePEc:eee:ejores:v:294:y:2021:i:3:p:987-1002
    DOI: 10.1016/j.ejor.2020.01.011
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    References listed on IDEAS

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    Cited by:

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    8. Hübner, Alexander & Hense, Jonas & Dethlefs, Christian, 2022. "The revival of retail stores via omnichannel operations: A literature review and research framework," European Journal of Operational Research, Elsevier, vol. 302(3), pages 799-818.
    9. Goedhart, Joost & Haijema, René & Akkerman, Renzo, 2023. "Modelling the influence of returns for an omni-channel retailer," European Journal of Operational Research, Elsevier, vol. 306(3), pages 1248-1263.
    10. He, Bo & Mirchandani, Prakash & Shen, Qichao & Yang, Guang, 2021. "How should local Brick-and-Mortar retailers offer delivery service in a pandemic World? Self-building Vs. O2O platform," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 154(C).
    11. Sarkar, Biswajit & Kar, Sumi & Basu, Kajla & Seo, Yong Won, 2023. "Is the online-offline buy-online-pickup-in-store retail strategy best among other product delivery strategies under variable lead time?," Journal of Retailing and Consumer Services, Elsevier, vol. 73(C).
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